More and more debt is piling up
A cura di di Walter Snyder, Swiss Financial Consulting
Massive debt is piling up globally with more than $255 trillion on the books. The US federal debt is now over $23 trillion and growing at more than one trillion a year. The US trade balance deficit is over $600 billion annually. US corporations have made record debts as they employ financial engineering to buy back their own shares. The US fracking industry has massive debts that will have to be rolled over in the near future.
At the same time central banks are intent on easing measures like Qe and non-Qe in order to shore up their economies as they foster more and more debt with negative returns. There is more than $15 trillion of negative-yielding debt globally.
If one adds to this the fact that US pension funds are woefully underfunded, it seems almost grotesque that the stock markets are recording record highs with investors becoming extremely complacent as volatility remains relatively low. The question arises as to where all this is leading to.
Various pundits and market observers predict doom and gloom: a market crash and massive debt defaults amid roaring inflation. Proponents of MMT (Modern Monetary Theory) claim there is no cause for alarm as central banks can monetize government debt and that governments can raise taxes to calm inflation.
The SNB (Swiss National Bank) now has over $90 billion worth of American stocks, purchased with money created by clicking on computer keys. The BoJ (Bank of Japan) has practically eliminated price discovery on the local bond market by gobbling up billions and billions worth of bonds, ETFs and other securities in yen. The Fed has recently returned to the markets and is increasing its bloated balance once again as it lowers interest rates.
What investors can do in such an environment where fiat currency threatens to implode is to prepare for the worst. Physical gold, gold stocks, silver and silver stocks, well-located real estate, art, classic cars, diamonds and diversification, diversification, diversification in investments and currencies can all serve as hedges against what is likely to be a massive tsunami-like financial crisis that is welling up as central bank madness permeates the halls of Wall Street and infects global markets. The central bankers do not know what they are doing as they attempt to navigate amidst the shoals of unchartered seas of debt.